Swan urges European action

Treasurer Wayne Swan will use a meeting of global finance ministers in Washington this weekend to tell his US and European counterparts to get their act together.

Mr Swan was responding to a dire warning from the International Monetary Fund that said the global economy was in a "dangerous new phase".

The IMF, in its latest World Economic Outlook, said global activity had weakened, confidence had fallen sharply and downside risks were growing.

It urged governments to take urgent action through strong policy responses.

The IMF is forecasting global growth falling to 4 per cent this year and in 2012, from 5.1 per cent in 2010, on the back of anaemic growth in advanced economies.

The fund also slashed Australia's growth forecast to 1.8 per cent in 2011 - down from 3 per cent - but predicted the economy would grow by 3.3 per cent in 2012.

Mr Swan, named Euromoney's Finance Minister of the Year on Tuesday, played down the lower growth forecast, saying it was a slight downgrade on the budget estimate of 2.25 per cent.

"That simply relates to the bigger-than-expected impact of the natural disasters in Australia earlier this year," he told ABC Radio.

"The fact is the underlying strength of our economy is recognised by the IMF."

Australia was "very well placed to handle the worst the world could throw at us".

But the treasurer intends delivering a blunt message to a meeting of his G20 colleagues.

"I will certainly be making the point that it's very important that the Europeans get their act together," he said.

"There's no doubt political inaction lies at the core of this challenge in both Europe and the United States."

Prime Minister Julia Gillard noted that the IMF saw the Asia-Pacific region as better positioned to face current global risks.

"We are in the part of the world that is growing," Ms Gillard told the Nine Network, adding Australia also had low unemployment, strong public finances and "a huge pipeline of growth" coming into the resources sector.

"There's nowhere else in the world you'd rather be than in Australia as the global economy goes through this phase."

The prime minister defended the timing of her government's decision to introduce taxes on carbon pollution and mining profits, especially when the local economy was operating at two speeds.

The minerals resource rent tax would take some more tax from that bit of the economy that was "charging ahead" and using it to support growth by cutting company tax and helping small business.